Geography Reference
In-Depth Information
were located firms and activities related to the production and delivery of
products which were substantially new, thereby in the early stages of their
product life cycles. Over time, as the products became more mature and
standardized, their production was increasingly moved out of the core city
area to more decentralized locations around New York, while the core
locations focussed on the provision of other new products at the early
stages in their product life cycles.
Combining the work of Hoover and Vernon (1959) with the work of
Vernon (1966) these observations were further developed by Markusen
(1985), who argued that within corporate multiplant and MNE structures
there tends to be a regular centre-periphery type of spatial structure which
is built around the product cycle logic. As mentioned in Chapter 2, such a
spatial structure tends to have the primary headquarter and research and
development functions all located in the core areas, which are dominated
by the types of knowledge spillovers described by Marshall, and tends to
focus on the production of goods in the early stages of their product life
cycles. Meanwhile the production of the more mature or standardized
goods which are at later stages of the product life cycles will tend to take
place in lower cost and more geographically peripheral locations. Within
the organizational structure of the multiplant and multinational firm,
there is a continual process of movement, whereby over time the firm
moves the production of each good from the core to the periphery of the
corporate geographical structure, according to the stage of its product life
cycle. As such, the types of international differences in multinational pro-
duction implied by the Vernon (1996) analysis are also largely replicated
at a sub-national interregional level within multiplant and multinational
corporate organizational structures.
The other relevant approach to industrial co-location phenomena
follows the work of Michael Porter (1990). Porter's approach focuses on
the arrangements of firms, organizations and institutions which are clus-
tered in a region, and the particular combinations of organizations and
mechanisms by which competitive processes between firms promote the
overall competitiveness of the group. The emphasis of the Porter approach
is on the role played by innovation, whereby firms continuously strive
to improve their innovative and competitive performance. The link here
between innovation and geographical proximity - which was examined in
Chapter 4, is that being clustered in the same location generates demon-
stration effects, whereby firms can clearly see if their competitor firms are
gaining a competitive advantage. This mutual transparency afforded by
proximity drives the competition between the individual firms within the
clustered group, promoting the competitiveness of the whole cluster. The
spillover effects which Porter emphasizes are therefore what are referred
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